U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File No. 0-21733
THE KINGSLEY COACH, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 23-3003600
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
64 Old Route 522, Middleburg, PA 17842
(Address of Principal Executive Offices)
Issuer's Telephone Number: (570) 837-7114
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the Registrant's classes of common stock, as of the
latest practicable date:
November 01, 2000
Common Voting Stock: 8,703,977
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
THE KINGSLEY COACH, INC.
BALANCE SHEET
September 30, 2000
(Unaudited)
ASSETS
Current Assets:
Cash $ 55,312
Accounts Receivable 224,607
Inventory 1,258,253
---------
Total Current Assets 1,538,172
---------
Property & Equipment, net 188,277
---------
Other Assets:
Prepaid Expenses 439,671
Deposits 3,650
---------
Total Other Assets 443,321
---------
TOTAL ASSETS $ 2,169,770
=========
LIABILITIES & STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts Payable $ 138,285
Accrued Liabilities 103,653
Payable - Related Parties 397,489
Customer Deposits 645,000
Note Payable - Manufacturers 69,505
Line of Credit 558,200
---------
Total Current Liabilities 1,912,132
---------
Long Term Liabilities:
Note Payable - Demonstrators 418,837
Note Payable - Shareholder 80,000
Note Payable - Other 88,580
---------
Total Long Term Liabilities 587,417
---------
Stockholders' Deficit
Preferred stock, $.00001 par value;
authorized 5,000,000 shares; issued
and outstanding -0- shares -
Common stock, $.00001 par value;
authorized 30,000,000 shares;
issued and outstanding 8,603,977 86
Additional Paid-in Capital 1,487,570
Accumulated Deficit (1,817,435)
---------
Total Stockholders' Deficit (329,779)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 2,169,770
=========
See accompanying notes to financial statements.
THE KINGSLEY COACH, INC.
STATEMENTS OF OPERATIONS
For the Three Month Periods Ended September 30, 2000 and 1999
(Unaudited)
Three Months Ended Three Months Ended
09/30/00 09/30/99
Revenue $ 1,395,550 $ 1,276,480
Cost of Sales 953,511 820,820
--------- ---------
Gross Margin 442,039 455,660
General and Administrative Expenses 399,665 395,262
--------- ---------
Net Income from Operations 42,374 60,398
--------- ---------
Other Income/(Expense):
Interest Expense (28,162) (24,983)
Other - (14,770)
--------- ---------
Total Other Income/(Expense) (28,162) (39,753)
--------- ---------
Net Income Before Taxes 14,212 20,645
Income Taxes - -
--------- ---------
Net Income $ 14,212 $ 20,645
========= =========
Income Per Share $ 0.00 $ 0.00
========= =========
Weighted Average Shares Outstanding 8,403,977 7,200,505
========= =========
See accompanying notes to the financial statements.
THE KINGSLEY COACH, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Three Month Period Ended September 30, 2000
(Unaudited)
Additional Total
Shares Common Paid-in Accumulated Stockholders'
Issued Stock Capital Deficit Deficit
==============================================================================
Balance,
June 30, 2000 8,403,977 $ 84 $ 1,401,072 $(1,831,647) $ (430,491)
Common stock issued
for prepaid services 200,000 2 86,498 - 86,500
Net Income for
the Period Ended
September 30, 2000 - - - 14,212 14,212
--------- ---- --------- ---------- --------
Balance,
September 30, 2000 8,603,977 $ 86 $ 1,487,570 $(1,817,435) $ (329,779)
========= ==== ========= ========== ========
See accompanying notes to the financial statements.
THE KINGSLEY COACH, INC.
STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended September 30, 2000 and 1999
(Unaudited)
Three Months Three Months
Ended Ended
09/30/00 09/30/99
Cash Flows Provided By/(Used For)
Operating Activities:
Net Income/(Loss) $ 14,212 $ 20,645
Adjustments to reconcile net loss to net cash
provided by/(used in) operating activities:
Depreciation/amortization 15,684 -
(Increase)/decrease in inventory (88,164) 108,611
(Increase) in accounts receivable (140,020) (75,659)
(Increase)/decrease in prepaid expenses 97,573 (5,000)
Increase in accounts payable 35,253 93,124
Increase in accrued liabilities 15,650 125,446
Increase/(decrease) in customer deposits (150,000) (101,442)
------- -------
Net Cash Provided By/(Used For)
Operating Activities (199,182) 170,725
------- -------
Cash Flows Provided By/(Used For)
Financing Activities:
Increase/(decrease) in notes payable 2,095 (56,308)
Advances from related party 147,489 -
------- -------
Net Cash Provided By/(Used For)
Financing Activities 149,584 (56,308)
------- -------
Net Increase/(Decrease) in Cash (50,228) 109,417
Beginning Cash Balance 105,540 74,429
------- -------
Ending Cash Balance $ 55,312 $ 183,846
======= =======
Supplemental Disclosure:
Interest paid $ 28,500 $ 24,900
Income taxes paid $ - $ -
Summary of non-cash transactions:
-- Issuance of 200,000 shares of common stock in exchange for prepaid
professional services, valued at $86,500 in September 2000.
See accompanying notes to the financial statements.
THE KINGSLEY COACH, INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Month Period Ended September 30, 2000
(Unaudited)
1. BASIS OF PRESENTATION
The interim financial statements for the three months ended September 30, 2000
reflect all adjustments which are, in the opinion of management, necessary to
provide a fair statement of the results of operations for the period. These
interim financial statements conform with the requirements for interim
financial statements and, consequently, do not include all the disclosures
normally required by generally accepted accounting principles.
2. INVENTORY
As of September 30, 2000, inventory consists of parts, work-in-process, and
finished units. Most parts are purchased and charged to the job. However,
other items are purchased in bulk and can be used on all Kingsley Coaches.
As of September 30, 2000, cost approximates market value, and no adjustment
has been recorded. Total inventory as of September 30, 2000 is as follows:
Parts inventory $ 57,319
Work-in-process 709,311
Finished Units/Demos 491,542
---------
Total Inventory $ 1,258,172
=========
3. PREPAID EXPENSES
Prepaid expenses as of September 30, 2000, consist of the following:
Prepaid outside professional fees $ 137,700
Management services retainer 290,721
Prepaid officer and director fees 11,250
-------
Total Prepaid Expenses $ 439,671
=======
4. RELATED PARTIES
In order to pay for the original development and formation of The Kingsley
Coach, LLC, and to fund ongoing operating expenses during the three months
ended September 30, 2000 and in prior years, parties related to the Company
have, from time to time, advanced monies to the Company. These advances are
summarized in the following manner:
Amount advanced
Shareholder note, 6% interest, due on demand $ 50,000
Shareholder note, non- interest, due on demand 200,000
Shareholder advance, non- interest, due on demand 147,489
Shareholder note, 10% interest, due December 15, 200 80,000
--------
$ 477,489
========
The Kingsley Coach, Inc.
Item 2. Management Discussion and Analysis
As of September 30, 2000, we had accumulated losses amounting to $(1,817,435)
and had a net working capital deficiency of $(373,960). As of September 30,
1999, we had accumulated losses amounting to $(1,759,727) and had a net
working capital deficiency of $(1,031,791). Management can satisfy cash
requirements through the end of the year from cash flow from operations
without needing to raise additional funds. However, we are actively seeking
to raise between $2,000,000 and $6,000,000 in additional capital in order to
increase production capacity, and to decrease delivery time of our product
to our customers. Ultimately, raising capital would allow the Company to
significantly expand its marketing effort as it would be in a position to
finance the related increase in production inventory.
As of July 2000, the Company completed its development phase. During 1998 and
1999 and the six months ended June 30, 2000, research and development costs
averaged approximately 30% of revenues. For the three months ended September
30, 2000, research and development costs were only 12% of revenues. The
Company believes that, in the future, research and development costs can be
held between 5% and 10% of sales. This decrease in research and development
costs, which can be attributed to the Company completing its development phase,
should greatly improve the Company's prospects for future profits. For that
reason, the Company believes that profitability can be sustained with even
small increases in production volume. The Company continued to maintain
significant gross profit margins on individual units, posting a gross margin
of 32% of revenues, as compared to 36% for the three months ended September
30, 1999. As future revenues increase, the Company anticipates profit margins
to decrease to 26% to 28%, with standard models, such as the Merlin and the
SURV, becoming an increasing part of the sales mix.. The Company anticipates
marginal increases in production during the quarter ending December 31, 2000,
and the Company expects such quarter to be profitable. As of November 6, 2000,
the Company has a backlog of 41 units, representing sales in excess of $10.0
million; without additional financing, it could take the Company over fifteen
months to produce these units.
We recognize that our product is considered a luxury item, and that as the
economy has enjoyed remarkable growth for some time, the growth cycle may end,
detrimentally affecting consumer interest in luxury items. However, we have
experienced a steady increase in market interest and sales, and this is
despite the fact that we have not any marketing effort except on a very
minimal level. The Company does intend to increase its marketing effort
consistent with its capacity for increased production, and, to this end, in
the quarter ending September 30, 2000, the Company did hire a national sales
director and contract with a national marketing firm to manage its marketing
campaign. Further, the Company fully expects, as more baby boomers begin
considering retirement, that sales will continue to increase for the
foreseeable future, even if the economy experiences a downturn. Because of
the Company's sales backlog and its current marketing efforts, the Company
does not expect the seasonality of the RV industry to have any impact upon the
Company during the next few quarters.
PART II - OTHER INFORMATION
Exhibit Number Description
EX-27 Financial Date Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE KINGSLEY COACH, INC.
Date: 11/15/2000 By: /S/ Terry A. Watkins
Terry A. Watkins,
Chief Executive Officer & Chief Financial Officer
